Online CD Seller Fights Suit

An eBay seller and Universal Music Group are battling in a legal case that could have wider implications for a consumer's right to resell purchased music.

Los Angeles area resident Troy Augusto makes a living by scooping up collectible albums at used-record stores, then selling them for a profit on the eBay online auction site. Many of those compact discs, marked "for promotional use only," were originally given away by record companies to radio stations and music publications as a means of promoting the music.

In the case in question, Universal claims that it owns the promotional CDs and that Augusto's practices infringe on its copyright. Augusto "has illegally sold promotional CDs belonging to major record companies" Universal says in the suit filed in May in U.S. District Court for the Central District of California.

The Electronic Frontier Foundation, a nonprofit organization in San Francisco that specializes in digital-rights issues, took up Augusto's cause and last month filed a counterclaim in the same court against the record label.

Fred von Lohmann, an attorney for the foundation, said the case was not just about whether someone may buy or sell albums online. If record labels are able to control their legal rights or how their products are sold by simply affixing a label, other industries would quickly follow suit, limiting consumers' ability to resell their items.

He said, for example, that book publishers could print labels keeping publications out of libraries, or movie studios could make it illegal for movie-rental stores to carry their products.

"If Universal is able to strip your first-sales rights by putting a label on these CDs, then there's nothing to stop other copyright owners from trying the same thing," he said.

Augusto was not available for comment yesterday. Von Lohmann said that reselling CDs online is Augusto's primary source of income.

The legal issue is the first-sale doctrine, a century-old tenet that holds that the buyer of a copyrighted work can sell or give away that work without the permission of the copyright owner.

In response to the EFF filing, Universal said in a statement that because the CDs were given away by the company, and not sold, the doctrine does not apply.

Von Lohmann called Universal's interpretation of the doctrine "flatly wrong," citing legal precedent that does not differentiate between a product that was originally sold and one that was given away.

This is not the first time Augusto has been sued by a record label. Three years ago, Capitol Records and Virgin Records sued him over his eBay auctions and consented to a permanent injunction.

Under the name Roast Beast Music Collectables, Augusto has sold more than 20,000 albums, according to Universal's legal filings. Augusto confirmed that figure in his counterclaim.